Brazil Becomes A New Front In The Battle Between Baidu And Qihoo

Baidu got one of their apps kicked off of Google Play in Brazil this week for calling antivirus startup Psafe a virus.

The Chinese search giant no longer has their antivirus app offered on Google Play in Brazil after using illegal competitive tactics against Brazilian antivirus startup PSafe (backed by Baidu rival QIhoo360), maker of the leading Android security app in Latin America.

Baidu and PSafe have been locked up in legal proceedings since PSafe accused Baidu’s Android antivirus app, DU Speed Booster, of aggressive competitive tactics that have resulted in some 700,000 uninstalls of PSafe’s app in Brazil since January. “They are basically calling our app a virus every five minutes via a pop-up on their Android app,” said PSafe founder and CEO Marco de Mello on a call from Rio de Janeiro.

The fight over installs (or uninstalls) may have less to do with Brazilian users and more to do with Chinese rivalry.

De Mello insists the attacks are personal – that Baidu’s app only asks users to uninstall the app if they have a SIM card from a Brazilian cell phone operator. “It doesn’t attack us on WIFI without a SIM card or with any foreign operator card present,” he insists.

The fight over installs (or uninstalls) may have less to do with Brazilian users and more to do with Chinese rivalry. PSafe’s biggest investor is Chinese anti-virus company Qihoo 360, which led a $30 million investment round in late 2013. Qihoo and Baidu, both publicly traded companies, have been trading heated disputes and questionable business practices for years in China, and the antivirus scuffle in Brazil may be a sign they are taking their battles (and tactics) to new markets.

“My view is that Baidu is playing hardball against Psafe in the Brazilian market,” says Ronaldo Lemos, an internet law professor who has been following the case closely Lemos was a key instigator of Brazil’s Marco Civil, an internet “bill of rights” that passed last April, and serves as director of Creative Commons in Brazil and serves on the Mozilla Foundation board of directors.

“They started announcing to their users that Psafe software is a “virus”, and have been doing that in a very annoying way (with pop us and repeated messages),” Lemos says. “Baidu did not comply with the injunction, and replied with nonsensical arguments to the court, saying that they could not modify the message only for PSafe, but they just did it, and the judge caught the contradiction. Because of the noncompliance on the part of Baidu, the judge ordered their app to be removed from the Google Play Store, and imposed a daily fine of R$100,000 [about US$40,000] per day. Baidu also has to send a message to their users rectifying the incorrect information about Psafe.”

“My view is that Baidu is playing hardball against Psafe in the Brazilian market,” Ronaldo Lemos

Baidu spokesperson Josh Fenn says Baidu’s attacks were were not targeted specifically at PSafe, explaining that PSafe was flagged by the DU Speed Booster’s malware signature system as “High Risk” for requesting excessive permissions:

The real heart of the issue was the in-app wording used to describe PSafe (it was automatically classified as “High Risk”), and we quickly acted to change its classification in accordance with PSafe’s wishes and the Brazil court’s ruling. PSafe is now identified by DU Speed Booster as a “Potential Risk” based on the number of permissions it requests.

Fenn insists Baidu has complied with the court injunction, and that Baidu is submitting an appeal with the court. But De Mello maintains Baidu’s attacks have not stopped. As of February 23, the DU Speed Booster app is no longer available for download from Google Play’s Brazil store.

Lemos is calling the case is a test for Marco Civil, and he says Brazil’s legal community is following it closely. “One reason for that is that Baidu‘s terms of service are in various points not-compliant with the provisions of Marco Civil,” he says, “such as the requirement to obtain express consent from the user if they are collecting data from the user, and expressly informing the user about what they do with the data. Also, Baidu‘s terms of service establish China as the jurisdiction to solve conflicts with their customers. That is also non-compliant with the Marco Civil jurisdiction provisions, and also the Brazilian Consumer Code.”

Ultimately the case will also be a test for Brazil’s appetite for digital aggression from China.